Loans and Allowance for Loan Losses | 90 days & Accruing December 31, 2018 Construction and land development $ 460 $ 43 $ — $ 503 $ 50,116 $ 50,619 $ — Farm loans — 804 — 804 230,896 231,700 — 1-4 Family residential properties 3,347 3,051 4,080 10,478 363,040 373,518 — Multifamily residential properties 1,149 — 1,955 3,104 180,947 184,051 — Commercial real estate 1,349 89 4,058 5,496 901,354 906,850 — Loans secured by real estate 6,305 3,987 10,093 20,385 1,726,353 1,746,738 — Agricultural loans 63 — 20 83 135,794 135,877 — Commercial and industrial loans 1,417 10 3,902 5,329 551,682 557,011 — Consumer loans 888 356 299 1,543 89,973 91,516 — All other loans 697 — — 697 112,680 113,377 — Total loans $ 9,370 $ 4,353 $ 14,314 $ 28,037 $ 2,616,482 $ 2,644,519 $ — December 31, 2017 Construction and land development $ 26 $ 48 $ — $ 74 $ 107,520 $ 107,594 $ — Farm loans — — 396 396 126,787 127,183 — 1-4 Family residential properties 3,023 538 1,767 5,328 288,339 293,667 — Multifamily residential properties — — — — 61,798 61,798 — Commercial real estate 90 38 3,566 3,694 678,063 681,757 — Loans secured by real estate 3,139 624 5,729 9,492 1,262,507 1,271,999 — Agricultural loans — 32 158 190 86,441 86,631 — Commercial and industrial loans 192 3 770 965 443,298 444,263 — Consumer loans 178 67 27 272 29,477 29,749 — All other loans — — — — 106,859 106,859 — Total loans $ 3,509 $ 726 $ 6,684 $ 10,919 $ 1,928,582 $ 1,939,501 $ — Impaired Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status. The following tables present impaired loans as of December 31, 2018 and 2017 (in thousands): 2018 2017 Recorded Balance Unpaid Principal Balance Specific Allowance Recorded Balance Unpaid Principal Balance Specific Allowance Loans with a specific allowance: Construction and land development $ 2,559 $ 2,559 $ 14 $ — $ — $ — Farm loans — — — 276 276 — 1-4 Family residential properties 4,565 4,952 234 1,026 1,347 25 Multifamily residential properties 4,465 4,465 — 313 313 — Commercial real estate 12,517 12,804 1,553 5,544 5,565 531 Loans secured by real estate 24,106 24,780 1,801 7,159 7,501 556 Agricultural loans 36 504 — 212 1,009 2 Commercial and industrial loans 8,292 8,723 1,475 5,774 6,037 64 Consumer loans 169 171 3 200 200 1 All other loans — — — — — — Total loans $ 32,603 $ 34,178 $ 3,279 $ 13,345 $ 14,747 $ 623 Loans without a specific allowance: Construction and land development $ 48 $ 48 $ — $ — $ — $ — Farm loans 309 309 — 15 15 — 1-4 Family residential properties 3,680 4,769 — 2,239 2,664 — Multifamily residential properties 7,597 7,597 — 55 55 — Commercial real estate 983 1,201 — 303 368 — Loans secured by real estate 12,617 13,924 — 2,612 3,102 — Agricultural loans 631 163 — 545 — — Commercial and industrial loans 1,660 2,027 — 909 1,249 — Consumer loans 471 1,006 — 102 119 — All other loans 6 6 — — — — Total loans $ 15,385 $ 17,126 $ — $ 4,168 $ 4,470 $ — Total loans: Construction and land development $ 2,607 $ 2,607 $ 14 $ — $ — $ — Farm loans 309 309 — 291 291 — 1-4 Family residential properties 8,245 9,721 234 3,265 4,011 25 Multifamily residential properties 12,062 12,062 — 368 368 — Commercial real estate 13,500 14,005 1,553 5,847 5,933 531 Loans secured by real estate 36,723 38,704 1,801 9,771 10,603 556 Agricultural loans 667 667 — 757 1,009 2 Commercial and industrial loans 9,952 10,750 1,475 6,683 7,286 64 Consumer loans 640 1,177 3 302 319 1 All other loans 6 6 — — — — Total loans $ 47,988 $ 51,304 $ 3,279 $ 17,513 $ 19,217 $ 623 The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be troubled debt restructurings is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. The following tables present average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2018, 2017 and 2016 (in thousands): 2018 2017 2016 Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Construction and land development $ 2,558 $ 37 $ — $ — $ 229 $ — Farm loans 415 — 293 — 207 — 1-4 Family residential properties 6,297 144 3,267 29 2,988 22 Multifamily residential properties 9,666 137 377 1 3,824 55 Commercial real estate 9,818 271 5,457 13 6,675 36 Loans secured by real estate 28,754 589 9,394 43 13,923 113 Agricultural loans 727 23 878 — 1,394 — Commercial and industrial loans 9,003 6 6,586 8 1,485 4 Consumer loans 131 1 325 — 557 2 All other loans 3 — — — — — Total loans $ 38,618 $ 619 $ 17,183 $ 51 $ 17,359 $ 119 The amount of interest income recognized by the Company within the periods stated above was due to loans modified in a troubled debt restructuring that remained on accrual status. The balance of loans modified in a troubled debt restructuring included in the impaired loans stated above that were still accruing was $7,237,000 of multifamily residential properties, $1,945,000 of construction & land development, $1,769,000 of 1-4 Family residential properties, $676,000 of commercial real estate, and $962,000 of commercial and industrial loans at December 31, 2018 and $578,000 of 1-4 Family residential properties, $251,000 of commercial real estate loans, and $25,000 of commercial and industrial loans at December 31, 2017 . For the years ended December 31, 2018, 2017 and 2016 , the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material. Non Accrual Loans The following table presents the Co" id="sjs-B4">Loans are stated at the principal amount outstanding net of unearned discounts, unearned income and allowance for loan losses. Unearned income includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at December 31, 2018 and 2017 follows (in thousands): 2018 2017 Construction and land development $ 51,013 $ 107,721 Farm loans 232,409 127,232 1-4 Family residential properties 374,751 294,483 Multifamily residential properties 186,393 61,966 Commercial real estate 911,656 684,639 Loans secured by real estate 1,756,222 1,276,041 Agricultural loans 136,125 86,602 Commercial and industrial loans 559,120 445,378 Consumer loans 92,744 30,070 All other loans 113,925 108,023 Gross loans 2,658,136 1,946,114 Less: Loans held for sale 1,508 1,025 2,656,628 1,945,089 Less: Net deferred loan fees, premiums and discounts 13,617 6,613 Allowance for loan losses 26,189 19,977 Net loans $ 2,616,822 $ 1,918,499 Net loans increased $698.3 million as of December 31, 2018 compared to December 31, 2017. Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at the lower of aggregate cost or market value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties. The balance of loans held for sale, excluded from the balances above, were $1,508,000 and $1,025,000 at December 31, 2018 and 2017 , respectively. Most of the Company’s business activities are with customers located within central Illinois. At December 31, 2018 , the Company’s loan portfolio included $368.5 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $276.1 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $154.7 million from $213.8 million at December 31, 2017 while loans concentrated in other grain farming increased $105.3 million from $170.8 million at December 31, 2017 . While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, at December 31, 2018 the Company had $129.2 million of loans to motels and hotels compared to $131.7 million at December 31, 2017 . The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also had $250.5 million and $186.0 million of loans to lessors of non-residential buildings at December 31, 2018 and 2017 , respectively, $289.2 million and $131.8 million of loans to lessors of residential buildings and dwellings at December 31, 2018 and 2017 , respectively, and $105.3 million and $95.7 million of loans to other gambling industries at December 31, 2018 and 2017 . The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the board of directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation; however, limits well below the regulatory thresholds are generally observed. The vast majority of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments. The Company’s lending can be summarized into the following primary areas: Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x . Amortization periods for commercial real estate loans are generally limited to twenty years . The Company’s commercial real estate portfolio is well below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators. Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years . Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government-assisted lending programs through the Small Business Administration and U.S. Department of Agriculture. Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 65% and have amortization periods limited to twenty five years . Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate. Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells the vast majority of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. The Company retains all residential real estate loans with balloon payment features. Balloon periods are limited to five years . Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty five years or less. The Company does not originate subprime mortgage loans. Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral. Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality. Purchase Credit-Impaired Loans. Loans acquired with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchase credit-impaired ("PCI") loans are accounted for under ASC 310-30, Receivables--Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"), and are initially measured at fair value, which includes the estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. The cash flows expected to be collected were estimated using current key assumptions, such as default rates, value of underlying collateral, severity and prepayment speeds. Allowance for Loan Losses The allowance for loan losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for loan losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for loan losses. In determining the adequacy of the allowance for loan losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for loan losses by separately evaluating large impaired loans and nonimpaired loans. The Company has loans acquired from business combinations with uncollected principal balances. These loans are carried net of a fair value adjustment for credit risk and interest rates and are only included in the allowance calculation to the extent that the reserve requirement exceeds the fair value adjustment. However, as the acquired loans renew, it is necessary to establish an allowance which represents an amount that, in management’s opinion, will be adequate to absorb probable credit losses inherent in such loans. Impaired loans. The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns. This evaluation considers expected future cash flows, the value of collateral and also other factors that may impact the borrower’s ability to make payments when due. For loans greater than $250,000 impairment is individually measured each quarter using one of three alternatives: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral do not justify the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs. Non-Impaired loans. Non-impaired loans comprise the vast majority of the Company’s total loan portfolio and include loans in accrual status and those credits not identified as troubled debt restructurings. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Watch, Substandard, or Doubtful. Determining the appropriate level of the allowance for loan losses for all non-impaired loans is based on a migration analysis of net losses over a rolling twelve quarter period by loan segment. A weighted average of the net losses is determined by assigning more weight to the most recent quarters in order to recognize current risk factors influencing the various segments of the loan portfolio more prominently than past periods. Environmental factors including changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of credit risk associated with specific industries and markets are evaluated each quarter to determine if adjustments to the weighted average historical net losses is appropriate given these current influences on the risk profile of each loan segment. Because the economic and business climate in any given industry or market, and its impact on any given borrower, can change rapidly, the risk profile of the loan portfolio is periodically assessed and adjusted when appropriate. Consumer loans are evaluated for adverse classification based primarily on the Uniform Retail Credit Classification and Account Management Policy established by the federal banking regulators. Classification standards are generally based on delinquency status, collateral coverage, bankruptcy and the presence of fraud. Due to weakened economic conditions during recent years, the Company established qualitative factor adjustments for each of the loan segments at levels above the historical net loss averages. Some of the economic factors included the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices and increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the allowance for loan losses. The Company has not materially changed any aspect of its overall approach in the determination of the allowance for loan losses. However, on an on-going basis the Company continues to refine the methods used in determining management’s best estimate of the allowance for loan losses. The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2018, 2017 and 2016 (in thousands): Commercial/ Commercial Real Estate Agricultural/ Agricultural Real Estate Residential Real Estate Consumer Unallocated Total December 31, 2018 Allowance for loan losses: Balance, beginning of year $ 16,546 $ 1,742 $ 886 $ 803 $ — $ 19,977 Provision charged to expense 6,070 548 1,447 602 — 8,667 Losses charged off (1,227 ) (93 ) (886 ) (787 ) — (2,993 ) Recoveries 167 — 57 314 — 538 Balance, end of period $ 21,556 $ 2,197 $ 1,504 $ 932 $ — $ 26,189 Ending balance: Individually evaluated for impairment $ 1,816 $ — $ 225 $ 3 $ — $ 2,044 Collectively evaluated for impairment $ 18,514 $ 2,197 $ 1,270 $ 929 $ — $ 22,910 Loans acquired with deteriorated credit quality $ 1,226 $ — $ 9 $ — $ — $ 1,235 Loans: Ending balance $ 1,784,741 $ 367,211 $ 392,526 $ 100,041 $ — $ 2,644,519 Ending Balance: Individually evaluated for impairment $ 14,422 $ 32 $ 2,360 $ 166 $ — $ 16,980 Collectively evaluated for impairment $ 1,756,908 $ 367,175 $ 387,961 $ 99,872 $ — $ 2,611,916 Loans acquired with deteriorated credit quality $ 13,411 $ 4 $ 2,205 $ 3 $ — $ 15,623 Commercial/ Commercial Real Estate Agricultural/ Agricultural Real Estate Residential Real Estate Consumer Unallocated Total December 31, 2017 Allowance for loan losses: Balance, beginning of year $ 12,901 $ 2,249 $ 874 $ 693 $ 36 $ 16,753 Provision charged to expense 6,884 153 100 361 (36 ) 7,462 Losses charged off (3,795 ) (662 ) (217 ) (521 ) — (5,195 ) Recoveries 556 2 129 270 — 957 Balance, end of period $ 16,546 $ 1,742 $ 886 $ 803 $ — $ 19,977 Ending balance: Individually evaluated for impairment $ 586 $ 2 $ 25 $ 1 $ — $ 614 Collectively evaluated for impairment $ 15,951 $ 1,740 $ 861 $ 802 $ — $ 19,354 Loans acquired with deteriorated credit quality 9 0 0 0 0 9 Loans: Ending balance $ 1,371,787 $ 213,521 $ 315,123 $ 39,070 $ — $ 1,939,501 Ending balance: Individually evaluated for impairment $ 11,372 $ 488 $ 1,026 $ 200 $ — $ 13,086 Collectively evaluated for impairment $ 1,360,156 $ 213,033 $ 314,097 $ 38,870 $ — $ 1,926,156 Loans acquired with deteriorated credit quality $ 259 $ — $ — $ — $ — $ 259 December 31, 2016 Allowance for loan losses: Balance, beginning of year $ 11,379 $ 1,337 $ 994 $ 642 $ 224 $ 14,576 Provision charged to expense 1,467 933 113 501 (188 ) 2,826 Losses charged off (747 ) (30 ) (234 ) (664 ) — (1,675 ) Recoveries 802 9 1 214 — 1,026 Balance, end of year $ 12,901 $ 2,249 $ 874 $ 693 $ 36 $ 16,753 Ending balance: Individually evaluated for impairment $ 192 $ 660 $ 6 $ — $ — $ 858 Collectively evaluated for impairment $ 12,695 $ 1,589 $ 868 $ 693 $ 36 $ 15,881 Loans acquired with deteriorated credit quality 14 0 0 0 0 14 Loans: Ending balance $ 1,204,799 $ 212,513 $ 366,823 $ 41,857 $ — $ 1,825,992 Ending balance: Individually evaluated for impairment $ 1,956 $ 1,345 $ 1,752 $ 213 $ — $ 5,266 Collectively evaluated for impairment $ 1,199,003 $ 211,168 $ 360,825 $ 41,644 $ — $ 1,812,640 Loans acquired with deteriorated credit quality $ 3,840 $ — $ 4,246 $ — $ — $ 8,086 Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. Credit Quality The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings, which are commensurate with a loan considered "criticized": Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current sound-worthiness and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing factors, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2018 and 2017 (in thousands): Construction & Land Development Farm Loans 1-4 Family Residential Properties Multifamily Residential Properties 2018 2017 2018 2017 2018 2017 2018 2017 Pass $ 49,794 $ 107,140 $ 221,047 $ 120,767 $ 352,583 $ 282,441 $ 163,845 $ 60,954 Special Mention 471 454 7,805 4,829 5,526 2,654 8,144 476 Substandard 354 — 2,848 1,587 15,409 8,572 12,062 368 Doubtful — — — — — — — — Total $ 50,619 $ 107,594 $ 231,700 $ 127,183 $ 373,518 $ 293,667 $ 184,051 $ 61,798 Commercial Real Estate (Nonfarm/Nonresidential) Agricultural Loans Commercial & Industrial Loans Consumer Loans 2018 2017 2018 2017 2018 2017 2018 2017 Pass $ 861,086 $ 647,208 $ 127,863 $ 83,469 $ 535,186 $ 425,846 $ 90,133 $ 29,375 Special Mention 16,035 16,941 7,581 2,304 9,967 11,492 177 5 Substandard 29,729 17,608 433 858 11,858 6,925 1,206 369 Doubtful — — — — — — — — Total $ 906,850 $ 681,757 $ 135,877 $ 86,631 $ 557,011 $ 444,263 $ 91,516 $ 29,749 All Other Loans Total Loans 2018 2017 2018 2017 Pass $ 110,352 $ 103,339 $ 2,511,889 $ 1,860,539 Special Mention 3,010 3,520 58,716 42,675 Substandard 15 — 73,914 36,287 Doubtful — — — — Total $ 113,377 $ 106,859 $ 2,644,519 $ 1,939,501 The following table presents the Company’s loan portfolio aging analysis at December 31, 2018 and 2017 (in thousands): 30-59 days Past Due 60-89 days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Total Loans > 90 days & Accruing December 31, 2018 Construction and land development $ 460 $ 43 $ — $ 503 $ 50,116 $ 50,619 $ — Farm loans — 804 — 804 230,896 231,700 — 1-4 Family residential properties 3,347 3,051 4,080 10,478 363,040 373,518 — Multifamily residential properties 1,149 — 1,955 3,104 180,947 184,051 — Commercial real estate 1,349 89 4,058 5,496 901,354 906,850 — Loans secured by real estate 6,305 3,987 10,093 20,385 1,726,353 1,746,738 — Agricultural loans 63 — 20 83 135,794 135,877 — Commercial and industrial loans 1,417 10 3,902 5,329 551,682 557,011 — Consumer loans 888 356 299 1,543 89,973 91,516 — All other loans 697 — — 697 112,680 113,377 — Total loans $ 9,370 $ 4,353 $ 14,314 $ 28,037 $ 2,616,482 $ 2,644,519 $ — December 31, 2017 Construction and land development $ 26 $ 48 $ — $ 74 $ 107,520 $ 107,594 $ — Farm loans — — 396 396 126,787 127,183 — 1-4 Family residential properties 3,023 538 1,767 5,328 288,339 293,667 — Multifamily residential properties — — — — 61,798 61,798 — Commercial real estate 90 38 3,566 3,694 678,063 681,757 — Loans secured by real estate 3,139 624 5,729 9,492 1,262,507 1,271,999 — Agricultural loans — 32 158 190 86,441 86,631 — Commercial and industrial loans 192 3 770 965 443,298 444,263 — Consumer loans 178 67 27 272 29,477 29,749 — All other loans — — — — 106,859 106,859 — Total loans $ 3,509 $ 726 $ 6,684 $ 10,919 $ 1,928,582 $ 1,939,501 $ — Impaired Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status. The following tables present impaired loans as of December 31, 2018 and 2017 (in thousands): 2018 2017 Recorded Balance Unpaid Principal Balance Specific Allowance Recorded Balance Unpaid Principal Balance Specific Allowance Loans with a specific allowance: Construction and land development $ 2,559 $ 2,559 $ 14 $ — $ — $ — Farm loans — — — 276 276 — 1-4 Family residential properties 4,565 4,952 234 1,026 1,347 25 Multifamily residential properties 4,465 4,465 — 313 313 — Commercial real estate 12,517 12,804 1,553 5,544 5,565 531 Loans secured by real estate 24,106 24,780 1,801 7,159 7,501 556 Agricultural loans 36 504 — 212 1,009 2 Commercial and industrial loans 8,292 8,723 1,475 5,774 6,037 64 Consumer loans 169 171 3 200 200 1 All other loans — — — — — — Total loans $ 32,603 $ 34,178 $ 3,279 $ 13,345 $ 14,747 $ 623 Loans without a specific allowance: Construction and land development $ 48 $ 48 $ — $ — $ — $ — Farm loans 309 309 — 15 15 — 1-4 Family residential properties 3,680 4,769 — 2,239 2,664 — Multifamily residential properties 7,597 7,597 — 55 55 — Commercial real estate 983 1,201 — 303 368 — Loans secured by real estate 12,617 13,924 — 2,612 3,102 — Agricultural loans 631 163 — 545 — — Commercial and industrial loans 1,660 2,027 — 909 1,249 — Consumer loans 471 1,006 — 102 119 — All other loans 6 6 — — — — Total loans $ 15,385 $ 17,126 $ — $ 4,168 $ 4,470 $ — Total loans: Construction and land development $ 2,607 $ 2,607 $ 14 $ — $ — $ — Farm loans 309 309 — 291 291 — 1-4 Family residential properties 8,245 9,721 234 3,265 4,011 25 Multifamily residential properties 12,062 12,062 — 368 368 — Commercial real estate 13,500 14,005 1,553 5,847 5,933 531 Loans secured by real estate 36,723 38,704 1,801 9,771 10,603 556 Agricultural loans 667 667 — 757 1,009 2 Commercial and industrial loans 9,952 10,750 1,475 6,683 7,286 64 Consumer loans 640 1,177 3 302 319 1 All other loans 6 6 — — — — Total loans $ 47,988 $ 51,304 $ 3,279 $ 17,513 $ 19,217 $ 623 The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be troubled debt restructurings is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. The following tables present average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2018, 2017 and 2016 (in thousands): 2018 2017 2016 Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Construction and land development $ 2,558 $ 37 $ — $ — $ 229 $ — Farm loans 415 — 293 — 207 — 1-4 Family residential properties 6,297 144 3,267 29 2,988 22 Multifamily residential properties 9,666 137 377 1 3,824 55 Commercial real estate 9,818 271 5,457 13 6,675 36 Loans secured by real estate 28,754 589 9,394 43 13,923 113 Agricultural loans 727 23 878 — 1,394 — Commercial and industrial loans 9,003 6 6,586 8 1,485 4 Consumer loans 131 1 325 — 557 2 All other loans 3 — — — — — Total loans $ 38,618 $ 619 $ 17,183 $ 51 $ 17,359 $ 119 The amount of interest income recognized by the Company within the periods stated above was due to loans modified in a troubled debt restructuring that remained on accrual status. The balance of loans modified in a troubled debt restructuring included in the impaired loans stated above that were still accruing was $7,237,000 of multifamily residential properties, $1,945,000 of construction & land development, $1,769,000 of 1-4 Family residential properties, $676,000 of commercial real estate, and $962,000 of commercial and industrial loans at December 31, 2018 and $578,000 of 1-4 Family residential properties, $251,000 of commercial real estate loans, and $25,000 of commercial and industrial loans at December 31, 2017 . For the years ended December 31, 2018, 2017 and 2016 , the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material. Non Accrual Loans The following table presents the Co |